Holley Reports Second Quarter 2021 Results

Strong organic growth and execution against strategic initiatives drive performance

Discloses quarterly 2020 historical results and confirms guidance

Holley Inc. (NYSE: HLLY), the largest and fastest growing platform serving performance automotive enthusiasts, today announced financial results for its second quarter ended June 27, 2021.

Second Quarter Highlights vs. Prior Year Period

  • Net Sales increased 54% to $193.0 million compared to $125.3 million in 2020
  • Gross Profit increased 48% to $81.2 million compared to $54.8 million last year
  • Operating Income increased 52% to $40.1 million compared to $26.3 million in 2020
  • Net Income increased 85% to $23.1 million from $12.5 million last year
  • Adjusted EBITDA1 increased 49% to $54.1 million compared to $36.4 million in 2020
  • Acquired AEM Performance Electronics (“AEM”) adding to Holley’s electronics offering
  • Continued execution on direct-to-consumer channel growth strategy

2021 Outlook

  • Company reiterates fiscal 2021 Net Sales expected to range between $648-$663 million, Pro Forma Net Sales1 between $655-$670 million, and Pro Forma Adjusted EBITDA1 between $165-170 million

1 See “Use and Reconciliation of Non-GAAP Financial Measures” below.

Tom Tomlinson, Holley’s President and Chief Executive Officer, said, “Consumer demand for our products was strong in the second quarter and we continued to see excellent growth in our direct-to-consumer channel. Our team performed well, captured significant additional demand in the quarter, and delivered great overall results.”

Second Quarter 2021 Financial Results

Net sales increased 54% to $193.0 million in the second quarter of 2021, up from $125.3 million in the second quarter of 2020. Non-comparable sales associated with acquisitions, including the AEM acquisition completed in April and several completed in the fourth quarter of 2020, contributed $36.7 million of net sales growth in the quarter. Organic growth for comparable brands contributed the remaining $31.0 million of year-over-year net sales growth, representing slightly more than 25% growth over second quarter 2020 net sales. Consumer demand for electronic performance products drove the majority of the organic growth in the quarter.

Cost of goods sold increased $41.4 million, or 59%, to $111.8 million, as compared to $70.5 million for the second quarter of 2020 and is primarily attributable to the increase in product sales. Gross profit for the thirteen weeks ended June 27, 2021 increased $26.4 million, or 48.1%, to $81.2 million, as compared to $54.8 million for the second quarter of 2020. The increase in gross profit was driven by the increase in sales. Gross margin for the thirteen weeks ended June 27, 2021 was 42.1% compared to a gross margin of 43.8% for the thirteen weeks ended June 28, 2020.

Selling, general and administrative costs for the quarter increased $9.9 million to $26.2 million, representing an increase of 61% when compared to $16.3 million in 2020. Incremental SG&A from recent acquisitions were responsible for $5.3 million of the increase in the quarter. Additional cost drivers include a $1.6 million increase in shipping costs related to higher sales and global supply chain pressure, higher audit fees associated with the business combination with Empower, and increases in software licensing that support Holley’s growth.

R&D and other operating expenses provided leverage in the second quarter, as those expenses increased 26% and 20%, respectively, against the net sales increase of 54%. Increases in these other operating expense areas are primarily due to acquisitions.

Net income for the second quarter 2021 reflects higher sales volume and the leverage achieved on certain fixed expenses. Net income improved to $23.1 million in the second quarter compared to $12.5 million in 2020, an increase of 85%.

Adjusted EBITDA grew from $36.4 million in the second quarter last year to $54.1 million in the second quarter of 2021, representing 49% year-over-year growth. Reconciliation to GAAP Net Income is included in the “Use and Reconciliation of Non-GAAP Financial Measures” table below.

Significant Event Subsequent to Quarter End

On July 16, 2021, Holley completed the business combination with Empower LTD and became a publicly traded company on the New York Stock Exchange (NYSE: HLLY). Since the transaction closed in Holley’s third fiscal quarter, the 10-Q Holley will file with the Securities and Exchange Commission for the second quarter will reflect the pre-combination results of Empower LTD.

Fiscal 2021 Full Year Outlook

We reiterate our full-year expectations of recognized net sales in the range of $648 to $663 million for fiscal 2021. We expect pro forma net sales in the range of $655 to $670 million, and pro forma adjusted EBITDA between $165 and $170 million. Additional information regarding pro forma adjustments is included in the “Use and Reconciliation of Non-GAAP Financial Measures” table below.

Dominic Bardos, Holley’s Chief Financial Officer, added, “We continued to execute on our strategy in the second quarter, with both organic growth and recent acquisitions contributing to our strong revenue performance. We expect sales growth to moderate in the back half of 2021, largely due to lapping strong 2020 performance and the three acquisitions made during the fourth quarter last year. Our full-year guidance also contemplates the uncertainties surrounding global supply chain challenges and inflationary pressure on raw material costs. Our markets remain strong and our consumers continue to be highly engaged.”

Conference Call

A conference call and audio webcast has been scheduled for 10:00 a.m. Eastern Time today to discuss these results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call available on the investor relations portion of the Company’s website at investor.holley.com. For those that cannot join the webcast, you can participate by dialing 1-844-200-6205 (United States Toll Free), 1-646-904-5544 (United States Local), or + 44-208-0682-558 (All Other Locations) using the access code of 472207.

For those unable to participate, a telephone replay recording will be available until Wednesday, September 1, 2021. To access the replay, please call 1-929-458-6194 (U.S.), 0204-525-0658 (U.K.), or + 44-204-525-0658 (All Other Locations) and enter confirmation code 986200. A web-based archive of the conference call will also be available at the Company’s website.

About Holley Inc.

Holley Inc. (NYSE: HLLY) is a leading designer, marketer, and manufacturer of high-performance products for car and truck enthusiasts. Holley offers the largest portfolio of iconic brands that deliver innovation and inspiration to a large and diverse community of millions of avid automotive enthusiasts who are passionate about the performance and personalization of their classic and modern cars. Holley has disrupted the performance category by putting the enthusiast consumer first, developing innovative new products, and building a robust M&A process that has added meaningful scale and diversity to its platform. For more information on Holley, visit https://www.holley.com.

Forward-Looking Statements

Certain statements in this press release may be considered “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Holley’s future financial or operating performance. For example, projections of future revenue and adjusted EBITDA and other metrics are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “or” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Holley and its management are inherently uncertain factors that may cause actual results to differ materially from current expectations include, but are not limited to: 1) the ability to recognize the anticipated benefits of the business combination with Empower LTD, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; 2) costs related to the business combination and Holley becoming a public company; 3) changes in applicable laws or regulations; 4) the outcome of any legal proceedings that may be instituted against Holley; 5) the possibility that Holley may be adversely affected by other economic, business and/or competitive factors; 6) Holley’s estimates of its financial performance; 7) the impact of the novel coronavirus disease pandemic and its effect on business and financial conditions; and 8) other risks and uncertainties set forth in the section entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Prospectus filed with the U.S. Securities and Exchange Commission (“SEC”) filed on July 28, 2021. Although Holley believe the expectations reflected in the forward-looking statements are reasonable, nothing in this press release should be regarded as a representation by any person that the forward-looking statements or projections set forth herein will be achieved or that any of the contemplated results of such forward looking statements or projections will be achieved. There may be additional risks that Holley presently does not know or that Holley currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Holley undertakes any duty to update these forward-looking statements, except as otherwise required by law.

[Financial Tables to Follow]

HOLLEY INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
For the thirteen weeks ended For the twenty-six weeks ended

 

 

27-Jun

 

June 28,

 

 

 

%

 

27-Jun

 

June 28,

 

 

 

%

2021

 

2020

 

Variance

 

Variance

 

2021

 

2020

 

Variance

 

Variance

Net Sales

$

193,041

$

125,296

$

67,745

54.1%

$

353,373

$

232,453

$

120,920

52.0%

Cost of Goods Sold

 

111,841

 

70,468

 

41,373

58.7%

 

206,494

 

134,292

 

72,202

53.8%

Gross Profit

 

81,200

 

54,828

 

26,372

48.1%

 

146,879

 

98,161

 

48,718

49.6%

 
Operating Expenses

 

41,138

 

28,479

 

12,659

44.5%

 

94,036

 

54,138

 

39,898

73.7%

Operating Income

 

40,062

 

26,349

 

13,713

52.0%

 

52,843

 

44,023

 

8,820

20.0%

 
Interest Expense

 

11,174

 

11,013

 

161

1.5%

 

21,245

 

22,518

 

(1,273)

-5.7%

 
Income Before Income Taxes

 

28,888

 

15,336

 

13,552

88.4%

 

31,598

 

21,505

 

10,093

46.9%

 
Income Tax Expense (Benefit)

 

5,790

 

2,827

 

2,963

104.8%

 

10,556

 

4,144

 

6,412

154.7%

 
Net Income (Loss)

 

23,098

 

12,509

 

10,589

84.7%

 

21,042

 

17,361

 

3,681

21.2%

 
Comprehensive Income:
Foreign Currency Translation Adj.

 

35

 

-

 

35

-

 

19

 

-

 

19

-

Total Comprehensive Net Income:

 

23,133

 

12,509

 

10,624

84.9%

 

21,061

 

17,361

 

3,700

21.3%

HOLLEY INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
For the thirteen weeks ended

 

 

March 29,

 

June 28,

 

Sept. 27,

 

Dec. 31,

 

March 28,

 

27-Jun

 

 

2020

 

2020

 

2020

 

2020

 

2021

 

2021

Net Sales

$

107,157

$

125,296

$

133,307

$

138,419

$

160,332

$

193,041

Cost of Goods Sold

 

63,824

 

70,468

 

77,778

 

83,865

 

94,653

 

111,841

Gross Profit

 

43,333

 

54,828

 

55,529

 

54,554

 

65,679

 

81,200

 
Operating Expenses

 

25,659

 

28,479

 

27,149

 

41,502

 

52,898

 

41,138

Operating Income

 

17,674

 

26,349

 

28,380

 

13,052

 

12,781

 

40,062

 
Interest Expense

 

11,505

 

11,013

 

9,325

 

11,929

 

10,071

 

11,174

 
Income Before Income Taxes

 

6,169

 

15,336

 

19,055

 

1,123

 

2,710

 

28,888

 
Income Tax Expense (Benefit)

 

1,317

 

2,827

 

5,512

 

(830)

 

4,766

 

5,790

 
Net Income (Loss)

 

4,852

 

12,509

 

13,543

 

1,953

 

(2,056)

 

23,098

 
Comprehensive Income:
Foreign Currency Translation Adj.

 

-

 

-

 

-

 

16

 

(16)

 

35

Total Comprehensive Net Income:

 

4,852

 

12,509

 

13,543

 

1,969

 

(2,072)

 

23,133

HOLLEY INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
 

 

 

As of

 

As of

 

As of

 

As of

 

As of

 

As of

 

 

March 29,

 

June 28,

 

Sept. 27,

 

Dec. 31,

 

March 28,

 

27-Jun

 

 

2020

 

2020

 

2020

 

2020

 

2021

 

2021

Assets
Total Current Assets

$

200,825

$

221,873

$

190,361

$

257,980

$

275,832

$

261,207

Net Property, Plant & Equipment

 

32,752

 

32,929

 

34,131

 

43,729

 

44,581

 

49,692

Goodwill

 

297,607

 

297,607

 

297,607

 

359,099

 

359,099

 

377,368

Other Net Intangibles

 

330,807

 

328,157

 

325,459

 

404,522

 

401,186

 

425,423

Total Assets

 

861,991

 

880,566

 

847,558

 

1,065,330

 

1,080,698

 

1,113,690

 
Liabilities and Stockholder's Equity
Total Current Liabilities

 

46,980

 

53,046

 

54,463

 

82,009

 

98,175

 

107,428

Long-term Debt Net of Current Portion

 

531,078

 

530,857

 

482,636

 

649,458

 

650,123

 

649,874

Deferred Taxes

 

51,656

 

51,863

 

51,995

 

71,336

 

71,814

 

72,538

Other Noncurrent Liabilities

 

21,890

 

21,890

 

21,890

 

22,146

 

22,146

 

22,146

Total Liabilities

 

651,604

 

657,656

 

610,984

 

824,949

 

842,258

 

851,986

 
Common Stock

 

-

 

-

 

-

 

-

 

-

 

-

Additional Paid-In Capital

 

236,624

 

236,638

 

236,759

 

238,890

 

239,021

 

239,152

Accumulated Loss

 

(397)

 

(397)

 

(397)

 

(674)

 

(690)

 

(655)

Retained Earnings

 

(25,840)

 

(13,331)

 

212

 

2,165

 

109

 

23,207

Total Stockholder's Equity

 

210,387

 

222,910

 

236,574

 

240,381

 

238,440

 

261,704

 
Total Liabilities and Stockholder's Equity

 

861,991

 

880,566

 

847,558

 

1,065,330

 

1,080,698

 

1,113,690

HOLLEY INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 

 

For the thirteen weeks ended

 

 

March 29,

 

June 28,

 

Sept. 27,

 

Dec. 31,

 

March 28,

 

27-Jun

 

 

2020

 

2020

 

2020

 

2020

 

2021

 

2021

Operating Activities
Net Income

$

4,852

 

$

12,509

 

$

13,543

 

$

1,953

 

$

(2,056)

 

$

23,098

Adjustments to Reconcile to Net Cash

 

5,964

 

5,811

 

6,102

 

13,960

 

7,142

 

24,855

Changes in Operating Assets & Liabilities

 

6,764

 

7,549

 

12,510

 

(3,104)

 

13,870

 

(20,512)

Net Cash from Operating Activities

 

17,580

 

25,869

 

32,155

 

12,809

 

18,956

 

27,441

 
Investing Activities
Capital Expenditures, Net of Dispositions

 

(1,283)

 

(2,152)

 

(3,218)

 

(2,082)

 

(3,104)

 

(3,752)

Acquisitions

 

-

 

(50)

 

-

 

(156,833)

 

-

 

(54,011)

Net Cash from Investing Activities

 

(1,283)

 

(2,202)

 

(3,218)

 

(158,915)

 

(3,104)

 

(57,763)

 
Financing Activities
Net Change and Principal Payments in Debt

 

27,500

 

(1,050)

 

(48,950)

 

163,044

 

(64)

 

(1,475)

 
Net Change in Cash & Cash Equivalents

 

43,797

 

22,617

 

(20,013)

 

16,938

 

15,788

 

(31,797)

 
Cash and Cash Equivalents
Beginning of Period

 

8,335

 

52,132

 

74,749

 

54,736

 

71,674

 

87,462

End of Period

 

52,132

 

74,749

 

54,736

 

71,674

 

87,462

 

55,665

HOLLEY INTERMEDIATE HOLDINGS, INC. and SUBSIDIARIES
USE AND RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)

 

 

 

For the thirteen weeks ended

 

 

 

June 27,

 

June 28,

Description

2021

 

2020

 
Net Income (Loss)

$

23,098

$

12,509

 
Adjustments:
Interest Expense

 

11,174

 

11,013

Income Taxes

 

5,790

 

2,827

Depreciation

 

2,201

 

1,988

Amortization

 

3,502

 

2,701

EBITDA

 

45,765

 

31,038

 
Acquisition Integration & Restructuring

 

2,676

 

3,118

Unusual or Nonrecurring Expenses

 

3,993

 

1,435

Related Party Acquisition and Management Fee Expenses

 

1,658

 

880

Other Expense

 

47

 

(109)

Adjusted EBITDA

 

54,139

 

36,362

 
13 Weeks Ended
Description June 27, 2021
Net Sales

 

193,041

Adjustments:
Sales from Acquisitions within 365 Days of Purchase (Non-Comparable to Prior Year)

 

(36,700)

Organic Sales (Comparable to Prior Year Period Net Sales)

 

156,341

 
2021 Forecast 2021 Forecast
Description Low Range High Range
Net Sales

$

647,600

$

662,600

Pre-Acquisition Net Sales (AEM Performance Electronics)

 

7,400

 

7,400

Pro Forma Net Sales

 

655,000

 

670,000

 
Adjusted EBITDA

$

163,400

$

168,400

Pre-Acquisition Adjusted EBITDA (AEM Performance Electronics)

 

1,600

 

1,600

Pro Forma Adjusted EBITDA

 

165,000

 

170,000

Holley believes EBITDA and Adjusted EBITDA are useful to investors in evaluating the Company’s financial performance. In addition, Holley uses these measures internally to establish forecasts, budgets and operational goals to manage and monitor its business. Holley believes that these non-GAAP financial measures help to depict a more realistic representation of the performance of the underlying business, enabling the Company to evaluate and plan more effectively for the future.

Holley defines EBITDA as earnings before (a) interest expense, (b) income taxes and (c) depreciation and amortization. Holley defines Adjusted EBITDA as EBITDA plus (i) unusual or nonrecurring expenses that consist primarily of the addback of the amortization of the fair market value increase in inventory in 2019 and 2018 (for 2020, the addbacks consist of the amortization of the fair market value increase in inventory and legal settlement), (ii) acquisition and restructuring costs, (iii) related party acquisition and management fee costs, and (iv) other expenses, which includes losses from disposal of fixed assets and foreign currency transactions.

Organic sales excludes the impact from sales from acquisitions within 365 days of the consummation of such acquisition. Holley believes organic sales provides investors with useful supplemental information regarding Holley's underlying sales trends.

EBITDA, Adjusted EBITDA and organic sales are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may be different from non-GAAP financial measures used by other companies. These measures should not be considered as measures of financial performance under GAAP, and the items excluded from or included in these metrics are significant components in understanding and assessing Holley’s financial performance. These metrics should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.

A forecast for 2021 Adjusted EBITDA and Pro Forma Adjusted EBITDA is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain items. Therefore, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, Holley is unable to provide a reconciliation of these measures without unreasonable effort.

Contacts

Investor Relations:

Ross Collins / Stephen Poe

Alpha IR Group

312-445-2870

HLLY@alpha-ir.com

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